Page:History of Fiat Money and Currency Inflation in New England from 1620 to 1789.djvu/18

 of inflation, and the logical sequence of inflation is repudiation. In the end the credit of the government is ruined and the people robbed. The bullish activity in the currency reached the limit of expansion in 1745. The government resorted to a lottery as a means of raising funds, some £7500, to meet the demands of the famous Louisburg expedition. This was a logical corollary appended to the problem of inflation.

In 1749 the British government sent over to Massachusetts 653,000 ounces of silver and ten tons of copper to be applied to the redemption of the province bills. This specie remittance saved the credit of the province. In June, 1751, £1,792,236 of public notes were redeemed in specie at the rate of one in specie to ten in paper. The miserable chimera of inflation, which began early in the century, developed in 1750 into a huge hydra which, through the intermittent stages, robbed the people of 90 per cent of the face value of the provincial output current at the time of redemption, besides arresting commerce and retarding the industrial interests of the community. Specie, which occasionally came into the province through the channels of commerce with Spain and the West Indies, was regularly transmitted to London. A magnet on the other side of the water—called the balance of trade—set the specie in a motion which reminds one too forcibly of perpetual motion. The inflated money oscillated within the sphere of its jurisdiction and never visited foreign lands.

The finances of the province of Massachusetts were in a needy condition very soon after the work of redemption was completed. In 1756 the province received £54,000 for past services against the French. The next year a grant of £27,380 was made by parliament and subsequent remittances to the province by parliament gave to the province the name of the "hard money colony." The old province